Locked Out: 3 Housing Buzzwords, Decoded

A starter home … in this economy? Inconceivable.

According to the National Association of Realtors, the median age of a first-time buyer is now 40. That’s both old enough to appreciate a Princess Bride reference and wise enough to wonder, “Why’s it so hard to buy a house right now?”

It might not be for lack of trying or budgeting. For many would-be buyers, it feels like the door to homeownership is right there, but the key keeps changing. This is the second installment in my new series “Locked Out,” where I look at forces that are bolting the door shut.

The housing crisis has its own vocabulary. These buzzwords help explain what gets built, what it costs and whether you have a shot. With major housing legislation being debated in Congress, it’s a good moment to understand the issues — and, if you’re inclined, make your voice heard.

Housing shortage

What it means: There aren’t enough homes to meet demand. Estimates vary, but experts say the U.S. is short roughly 3 million to 5 million homes.

Part of the problem comes from decades of building trends. As land and construction costs have risen, builders have focused more on larger, higher-priced homes, which tend to be more profitable.

The result? Fewer entry-level options for first-time buyers. Roughly 3 in 5 Americans (61%) say starter homes don’t even exist anymore, according to a recent NerdWallet survey conducted online by The Harris Poll.

Why it matters: When supply is low, competition drives up prices. That’s why lawmakers in both parties often frame affordability as a supply problem.

A major bipartisan housing package, the 21st Century ROAD to Housing Act, aims to encourage new construction by cutting regulatory red tape and expanding financing tools. The bill, co-sponsored by Sen. Tim Scott, R-S.C., and Sen. Elizabeth Warren, D-Mass., passed the Senate on March 12. It’s now with the House for further negotiations.

If more homes get built, the market could loosen up. But even if this bill becomes law, its effects could take years to show up in the market.

Investor ban

What it means: Limiting large firms that buy lower-priced homes with cash, turning them into corporate-owned rentals instead of locally-owned homes. 

A proposal to crack down on large investors buying homes has gone mainstream, helped in part by President Donald Trump’s January executive order. This “investor ban” is now being considered as part of the bipartisan housing bill, targeting companies that own 350 or more homes.

Why it matters: It’s easy to assume large investors are a major driver of the housing crunch — but nationally, their role is smaller than it sounds.

About 20% of single-family homes are investor-owned, according to BatchData, an investor-focused real estate data platform. But most aren’t giant corporations — they’re smaller investors with 10 or fewer properties. These “mom and pop” landlords make up nearly 96% of investor-owned homes.

“This is a Scooby-Doo scenario,” says my colleague Kate Wood, lending expert and spokesperson at NerdWallet. “We think we're facing this monster institutional investor, but pull off the mask, and it's someone you know.”

Banning large investors could make a difference in some markets. But nationwide, the bigger issue is supply; there still aren’t enough homes to meet demand.

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If supply is the issue, the next question is: Why aren’t we building more homes in the first place?

Zoning reform

What it means: Zoning code, handled locally, determines what kind of housing can and can’t be built in your neighborhood.

One day, you’re young and carefree. The next, you’re scrolling through a city council PDF and wondering what “zoning reform” means for your block.

All the national policy talk about building more homes runs into a simple reality: Local rules still call the shots. In many cities, residential areas are restricted to single-family homes only. This limits new housing, even in places where demand is high.

That means fewer duplexes, townhomes or small apartment buildings — sometimes called “missing middle” housing. These homes are often more affordable for low- to moderate-income buyers.

Zoning codes aren’t the enemy. They simply set the rules for what gets built. But when those rules are too strict, fewer homes get added, keeping supply low and prices high.

Why it matters: Zoning debates play out locally in city council meetings, zoning boards and even neighborhood Facebook groups.

Building more housing sounds great on paper. But if you finally own a home, it’s normal to wonder what new development means for your property values.

I knew I was middle-aged when I signed up for a walking tour to learn about my local zoning code — like regulations against the charming brick apartment buildings dotting the neighborhood that, technically, would be illegal to build today.

In discussions about zoning, you may hear YIMBY (“Yes In My Backyard”) and NIMBY (“Not In My Backyard”) — shorthand for opinions in the fight over what gets built and where. Whether you’re buying a home or you already own, pay attention to local zoning decisions. They can shape what kinds of places get built in your area.

Why this matters for your home search

Housing jargon can feel abstract, but these aren’t just policy debates happening somewhere else. These decisions impact what shows up in your home search results and how much house you can afford.

If you’re trying to buy, pay attention not only to today’s mortgage rates, but to what’s getting approved (or blocked) in your community. If your budget is tight, a townhome or duplex can help you achieve homeownership sooner — but these entry-level options only get built if local rules allow them.

In today’s market, getting your foot in the door isn’t only about your budget. It’s about the policy decisions that shape who can afford to own a house — and who’s still locked out.

The article Locked Out: 3 Housing Buzzwords, Decoded originally appeared on NerdWallet.